Snapchat signals e-commerce ambitions

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Snapchat has begun selling merchandise in a new digital store in the Discover section of the app, Ad Age reports. The move marks the first time Snapchat has sold its own branded merchandise in-app.

The in-app store currently sells a few Snapchat-branded items, including sweatshirts and a plush toy of its famous dancing hot dog, ranging from $20 to $50. Snapchat is currently not letting other brands sell items through the digital store. Certain product listings are ephemeral, and the next wave of products will appear on February 8.

Snapchat says the digital store is solely focused on driving brand loyalty. The company is launching the in-app store as a way to strengthen ties with its users, according to a Snap spokesperson per TechCrunch. This is a reasonable explanation given Snapchat would need to sell a significant amount of merchandise to generate any meaningful revenue — over 20 million hot dog plush toys, which are priced at $20, to recoup its $443 million Q3 2017 net loss, for example.

However, given the potential revenue opportunities, this could change over time.Snapchat's branded merchandise play could be a preemptive move to field users' interest of purchasing items on the app. If users adopt the feature, Snapchat could opt to sell higher priced items, such as its Spectacles— its $130 camera equipped sunglasses — to help drive revenue. Growing revenue will help the company appease investors worried about its financial performance — Snapchat came nearly $30 million short of revenue expectations in Q3 2017.

The digital store could also help Snapchat court publishers and influencers:

Publishers.Snapchat could allow its publisher partners to sell their branded items as a way to incentivize them to continue distributing content on Discover. This can help the company capitalize on Facebook's News Feed tweak that de-prioritizes publisher content, as users may increasingly turn to other platforms for news.

Influencers. Snapchat could lure influencers by allowing them to sell their own branded merchandise through the in-app store, as selling merchandise is one of the main ways influencers can monetize. The company has not historically provided monetization tools for influencers, but is focused on changing this as influencers could bring their loyal fan bases to the platform. Attracting loyal followers would help Snapchat address its slowing user growth, an issue that ailed the company throughout 2017.